Toyota to build Lexus cars at Georgetown, Ky. plant

Company says expansion will add 750 jobs

Toyota will start building the Lexus ES 350 at a factory in Georgetown, Ky., starting in 2015, producing a luxury brand vehicle for the first time in the United States.

"Today, I am pleased to announce one of our worst kept secrets, that starting in 2015, we'll build the popular Lexus ES 350 sedan in the United States, on a new dedicated assembly line at our plant in Georgetown, Kentucky," Toyota president Akio Toyoda said.

The company said the plant will build about 50,000 of the flagship sedans each year, creating 750 new jobs.

"When they pick this up, of course all the satellite companies that supply Toyota, they're going to have to pick up the pace, too in order to be able to meet the demand coming from Toyota. It's fantastic," Georgetown mayor Everette Varney said.

The Georgetown plant currently assembles the Camry, Avalon and Venza models as well as their hybrid counterparts. The plant already employs about 6,600 people.

Toyota said it will invest $360 million to build the Lexus assembly line, boosting Georgetown's annual vehicle production to 550,000 a year. The company made the announcement at simultaneous news conferences Friday in New York and Georgetown.

"It is fitting that the first country to build the ES outside of Japan is the United States," Toyota Motor Corp. President Akio Toyoda, the company's top executive, said in New York. "This is the home for Lexus. It was where the brand was founded and it is still the biggest market for the luxury brand."

Toyota started the Lexus luxury brand in 1990 and has since sold nearly 1.2 million ES sedans in the U.S., Toyoda said.

Kentucky Gov. Steve Beshear said Toyota would invest a total of $531 million in the Georgetown plant, but the company gave no details of how the remaining $171 million would be spent. A top auto industry analyst said he would be surprised if the company didn't move more production to the factory.

Michael Robinet, managing director of IHS Automotive, a firm that tracks auto production, said a $531 million expansion should bring enough space to build even more vehicles every year. Toyota, he said, likely has plans to add more models and employees in the future.

"Fifty thousand (sedans) is a starting point," he said. "I would be floored if for a half a billion dollars, that the 50,000 didn't turn into between 100,000 and 150,000," he said.

The Kentucky Economic Development Finance Authority approved $146.5 million in state tax incentives on Wednesday to help with the cost of the expansion.

The Lexus ES, a large midsize luxury car, is offered in conventional and gas-electric hybrid versions. Initally at least, only the gas-powered cars will be made in Kentucky.

The move is being made to meet additional demand for the cars. Sales have nearly doubled so far this year compared with 2012. Last year, ES sales rose 37 percent. Toyota sold just over 56,000 ES models in the U.S. last year.

Jim Lentz, Toyota's North American CEO, said the investment is in addition to previously announced plans to sink $2 billion into factories in Mississippi, Indiana, West Virginia and in Canada during the past 17 months, creating more than 4,000 jobs.

Lentz has said Toyota would continue to move production to North America as a hedge against fluctuations in the value of the yen versus the dollar. The company now builds in North America roughly 70 percent of the cars and trucks it sells in the region, he said.

The strong yen had caused Japanese automakers to produce more cars in North America. But recently the yen has weakened against the U.S. dollar, helping Japanese exporters. Lentz said the weaker yen is short term, and Toyota's broader strategy is to build where it sells.

Toyota also announced a new focus on stylish design for the Lexus brand. Both Toyota and Lexus vehicles have been praised for their reliability but criticized for bland designs and performance.

Toyoda said the decision to build the ES in the United States was the first made by a new team of executives in North America and a management structure that gives them authority to make faster decisions.

"Quite honestly, as Governor, I feel like the state has just won the Kentucky Derby," Gov. Steve Beshear said. "It was a long process, but by golly, we won it, and it's here, and it's huge for us for the future."

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